Sixth step - check it out!

Couple of notes

Compression is very effective as it can compress 2 GB file system (KDE + Libre Office + couple of smaller applications) to around 700 MB.

System becomes blazingly fast and you can easily create live usb this way.

To make your changes persistent just create partitions labelled accordingly live-rw for root, home-rw for home file system and add persistent parameter to kernel boot parameters. If you can't create new partitions then create files in root directory (not in live fs). For example to create persistent home (200MB, without reserved blocks) use commands: